This is the type of hack you need to be both smart enough and dumb enough to commit.
Feds arrest couple, seize $3.6B in hacked Bitcoin funds
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Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#212Earlier quoted context omitted.
Another possibility is Ironfish( https://ironfish.network/ ), but I don't know how much liquidity there exists in either of these. I don't think you could launder/hide $4bn through either of these. Perhaps slowly over a long period of time.
Ironfish is just a testnet so there is zero liquidity there because it isn't even launched. Tornado cash has about $700mm right now deposited in it, with the vast majority of that being in the 100 ETH deposit pool. They absolutely could have done it over time. They could have bridged the Bitcoin using the RenVM protocol to receive renBTC, done a combination of selling the renBTC and let arbitrageurs provide the liqui…
Excellent post!
I have a question: is it possible to write scripts to do the above automatically? Or does it have to be a manual process?
Few people understand the ecosystem thoroughly (I admit that I do not), so few people can implement the manual process properly. One mistake equals 0 privacy.
Also, would they be allowed to use renVM since everyone knew that these accounts contained bad bitcoin?
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#213Shouldn't all true crypto believers hate this news? It's the government trying to enforce their opinion of who should own those Bitcoins, thereby taking power away from the owner that the network has decided on, which would be "whoever has the cryptographic keys".
I have the somewhat contradictory wishes, that good people should be able to hide from crooked cops, but crooked people should not be able to hide from good cops. Making it somewhat difficult, but not impossible to catch criminals seems to strike a balance.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#214Does this mean users who lost everything on bitfinex will be contacted and could possibly recover their coins? Can you imagine waking up to realize you are rich because the feds seized the coins and are returning to you.
It means the BTC will re-enter market eventually , so not good for longs.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#215Ilya Lichtenstein (YC S11) is the co-founder of YC-backed MixRank. Heather Morgan, his wife, is apparently a serial entrepreneur, investor, and "contributor" to Forbes.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#216Shouldn't all true crypto believers hate this news? It's the government trying to enforce their opinion of who should own those Bitcoins, thereby taking power away from the owner that the network has decided on, which would be "whoever has the cryptographic keys".
Technically they were charged with conspiring to launder money, completely unrelated to any mention of theft or hacking. From TFA: "Court papers filed against the couple did not accuse them of the hack itself; officials declined to say if the pair are suspected of stealing the money."
Interesting point, but if the government considered whoever had control of the coins the rightful owner and not stolen, would it be laundering then? It doesn't sound like a problem of taxes.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#217Earlier quoted context omitted.
Well, the police had a search warrant, so the police could have found them if they had had them in their possession anyway. Sure, they could have destroyed them, losing the money but maybe not getting arrested?
When a few billion is at stake, you think they'd make the effort to memorize the keys. Or at least encrypt them.
When a few billion is at stake, I would definitely not trust my memory for a chance to lose access.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#218Earlier quoted context omitted.
you would only need to memorize one seed to spawn infinite key pairs
can you elaborate? I find this very interesting. We can't choose which private key we get. So is it possible for 1 seed to generate all of them? Doesn't that break information theory (Shannon's compression limit)?
First you create the seed, then you create the keys. Not the other way around.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#219Earlier quoted context omitted.
> Not to mention, this threat could have been easily mitigated by keeping your funds in a multsig wallet, with the keys distributed in multiple redundant locations. And if you're released from prison and recover your Bitcoin, you will be arrested again for contempt of court or a similar charge.
Why anyone would use BTC and not some privacy coin for this kind of scenario escapes me.
If you read the original DOJ filing, they actually did that. They used :
> anonymity-enhanced virtual currency (AEC), in a practice known as “chain hopping”; and using U.S.-based business accounts to legitimize their banking activity.
Their problem was that they "closed" the money circle by sending it to real bank accounts. That's how they caught their trace. It seems that laundering billions of dollars is not as easy as they thought haha.
Re: Feds arrest couple, seize $3.6B in hacked Bitcoin funds
#220> “After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein,” the press release said. “Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and rec…
3) they made the big blunder of keeping their private keys in their online account. Most likely a txt file in google drive. That is such a silly blunder. Without the private keys, the police has zero proof of anything. They could have made a hundred excuses for how they got money in their bank account, as long as the police didn't have the private keys. Who keeps their private keys in an online account? Not necessari…
I agee. Also, intimidation tactics can work here - e.g. telling them they might go to prison for life bec justice wants to make an example out of them.